Innovation in communications service providers will fail again after the launch of 5G? How can it work?
As it is evident in recent years, the Communications service providers (CSPs, telco operators) start to lose their technological leading perception and begin to convert to a utility provider in customers’ perception. They haven’t filled the customers’ changing technological needs rather than providing internet bandwidth, limited applications, and solutions to the end-users who were not competing with the app developers and the application platform providers. Even they haven’t been able to penetrate the IoT markets.
In 2011, the CEO of Telefónica’s new Digital division admitted that mobile operators’ failure to innovate has seen them becoming “commoditized” and — perhaps mostly tellingly — “irrelevant.”
Similarly, in 2020 telco operators are pinning their hopes on driving 5G revenues from enterprise customers. However, “market insights from research house Omdia suggest they are in danger of missing their golden B2B 5G opportunity, potentially worth trillions of dollars during the coming decades, unless they revamp their go-to-market strategies.”
A 2020 report titled Industries and enterprises are ready to reap the benefits of 5G and released today by digital business platform, and cloud-native BSS specialist BearingPoint//Beyond concludes that CSPs are missing out on playing the lead role in early 5G enterprise services deals and are not being included at all in some.
Moreover, there is an intensive competition between telco players, and this is pushing the price level and profit margins down. The technological changes in the IoT markets, complex range of products and solutions, as well as smartphones and applications markets, haven’t been able to be leveraged by the telco operators. Their main focus stayed on classic utility-related revenues. Although few attempts have a good response from the market, such as alternative instant messaging platforms (BIP -Turkcell) have a wide range of usage, they haven’t been able to replicate this position in other areas.
I think being a dominant player in the market with significant cash and access to funds, any leading telco company could easily work with regional technology development companies to leverage the ideas and solutions that could benefit their business model create new business models. This can be executed by both inside-out and outside-in approaches simultaneously. The initial phases of implementing and developing open innovation need to be supported by the top management and cascaded down with an understanding of open innovation concepts. I believe developing business model concepts and continuously seeking new services and solutions by partnering with a wide range of regional and international vendors will bring innovation to the organization. These organizations have skilled resources and a wide range of stakeholders in place, which a clear strategy and focus could drive.
Sources:
Learning from the failure: Experiences in the Korean telecommunications market
(https://www.researchgate.net/publication/228400361)
https://www.bearingpointbeyond.com/en/industries/5g/5g-insights/5g-enterprise/
https://www.marketingweek.com/why-have-mobile-operators-failed-to-innovate-for-so-long/